IBP Has Arrived: Is it Time for Manufacturers to Replace Their CPM Systems?

In recent months, I’ve had the opportunity to speak with a number finance professionals that had three things in common.

  • First, they all work for complex manufacturing organizations.
  • Second, these organizations were early adopters of traditional Corporate Performance Management (CPM) applications – ones that employ “cube-based” planning approaches.
  • And third, they had all come to a common conclusion: their CPM systems were not meeting their needs.

This doesn’t mean that the organizations didn’t benefit from the use of these CPM tools. All thought that budgeting, reporting, consolidation and closing processes had been greatly improved by the ability to automate and standardize data collection and presentation. But they also understood these are tactical value sources. More strategic value was yet to be achieved from more forward looking planning activities. The inability to realize such value is what ultimately led them to conclude that their CPM systems had significant capability gaps.


These gaps often remain, despite efforts to integrate CPM with Sales and Operations Planning applications to deliver Integrated Business Planning (IBP) processes. Scenario planning is often marginally improved, while functional silos continue to impede the free flow of resources across the organization.

 

What these people shared was a common problem. Their companies were already using what the market defined as leading CPM systems and vendors. So convincing others to do something different was a challenge. What they needed was the answer to one question: what new approaches and / or technologies could address these gaps?

 

I recently wrote an article, called CPM In Manufacturing, that addressed this question.  What it described was the emergence of applications that integrate CPM and S&OP.  The key differentiator: embedded modeling logic that is shared by these processes in a single application. The result: a more robust form on IBP.  I won’t go into the details here. You can read about them here.


There are a number of obstacles to fully leveraging these IBP platforms.

  • First, they aren’t well known by organizations or market analysts.
  • Second, organizations still buy CPM and S&OP applications separately.
  • And third, they don’t always see the shortcomings of this siloed approach. The fact is that simply combining CPM and S&OP does not always deliver the same scenario planning capabilities that drive the vast majority of CPM, S&OP and IBP value potential.

 

Manufacturers should be asking themselves one basic question: what’s the value of these emerging IBP applications? And more specifically, the models that comprise them.  What they’ll often find is that they are leaving significant value on the table that traditional CPM systems can’t support. Which will cause some to ask, is it time to replace our CPM systems?

What are your thoughts? Is your CPM solution adding the value it should be?

 

Tagetik CPM Software

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